To amend sections 135.61, 135.62, 135.621, 135.623, 1733.04, and 1733.24 and to enact section 135.67 of the Revised Code to create the small defense business linked deposit program.
HB332 creates a new "small defense business linked deposit program" within Ohio's existing linked deposit framework. The bill authorizes the state treasurer to place state funds in linked deposits with eligible lending institutions, which in turn must offer reduced-rate loans to qualifying small defense-oriented businesses. To qualify, a borrower must be headquartered in Ohio for at least five years, maintain most of its offices or facilities in the state, have a contract with the U.S. armed forces or a federal defense-related agency, have less than $25 million in annual gross receipts, and be organized for profit. The bill states that the program is intended to help defense-related businesses overcome capital constraints, inflation, and higher interest rates, and to support job creation and business growth in Ohio.
The bill also updates several existing linked deposit statutes and credit union provisions to incorporate the new program. It amends definitions and procedures in the linked deposit laws, allows the treasurer to adopt rules for administration, and authorizes eligible lending institutions to process applications and certify borrower eligibility. It also expands credit union authority to participate in and pledge assets for linked deposit programs, including the new defense business program. The bill includes confidentiality provisions making certain borrower and participant records nonpublic, covering financial and personal information used in connection with these loans and deposits.
In practical terms, HB332 would affect the state treasurer, participating banks and credit unions, and Ohio businesses that meet the defense-industry criteria. It would create a state-supported financing tool that lowers borrowing costs for a narrow class of businesses tied to defense work, while preserving ordinary lending standards and capping the state’s linked deposit exposure at 12% of the state’s average investment portfolio. The bill also makes false statements on applications subject to Ohio’s falsification law.
The general sentiment reflected in the voting history appears strongly favorable. The bill received a 9-1 favorable report in the House Small Business Committee and then passed the House by a wide margin, 88-5. That pattern suggests broad support for using state investment tools to encourage small business growth and defense-sector development in Ohio.
The main points of contention are likely to be the narrow eligibility criteria and the use of public funds to subsidize private borrowing. The program is limited to businesses with a defense contract history, Ohio headquarters and operations, and relatively modest gross receipts, which may prompt questions about whether the benefits are too targeted or whether other small businesses should receive similar assistance. Another possible concern is the confidentiality provision, which removes certain borrower and transaction records from public-records access.
HB332 would amend Ohio’s linked deposit statutes in Chapter 135 and related credit union provisions in Chapter 1733 to add a new state-administered financing program for small defense businesses. It would authorize the treasurer of state to place linked deposits for this program, set related rules and deposit agreements, and treat qualifying borrower and transaction records as confidential rather than public records. The bill would also expand credit union authority to participate in linked deposit programs and make conforming changes to existing definitions and procedures.
The bill appears to have received generally positive support. It advanced from the House Small Business Committee with a 9-1 favorable vote and then passed the House 88-5, indicating broad bipartisan approval. The available record shows no committee transcript opposition, but the close committee dissent and the small number of floor nays suggest some reservations about the program’s scope or policy design.
Likely areas of disagreement include whether the state should create a specialized financing program for defense-oriented firms rather than a broader small-business tool, and whether the eligibility rules are too restrictive by requiring Ohio headquarters, a five-year in-state history, a defense contract, and under $25 million in gross receipts. There may also be concern about the bill’s confidentiality provisions, which shield borrower and participant financial records from public disclosure, and about the use of state-linked deposits to indirectly support private lending.